Liberia’s economy will grow 7 percent this year and it hopes for a recovery that will bring jobs and cash after foreign investment dwindled due to the global financial crisis, its finance minister said.
The West African country was hit by the economic downturn as demand for its exports such as timber, rubber and metals dropped, costing jobs and driving the unemployment rate up to a huge 85 %, according to US government data.
“GDP for 2010 is estimated to be around $1 billion, or (up) 7 percent, compared to 5 percent last year. But we had growth projections for this year at 13 percent before the crisis hit,” Finance Minister Augustine Ngafuana told Reuters on the sidelines of the International Monetary Fund spring meetings.
“We hope that we can put the country on a faster track,” he said adding that despite its large resources, it remains under-developed.
The minister said Liberia needs more regional integration with its West African neighbours and trade agreements to be in a stronger negotiating position with foreign investors.
“It is a question as to whether Africa has gotten fair prices for its resources. And each African country engaging with a partner, a Western partner, is like an ant versus a 900-pound gorilla. So coming together, collectivizing strategies in regional integration or trade agreements only makes Africa have a stronger position.”
Liberia fared better in the financial crisis compared with other African countries, as multinational companies merely reduced activities while in others they shut down completely.
One of the biggest companies in the country, Arcelor Mittal which has a $2.6 billion iron ore mining concession, should have started exporting from Liberia this year. But because of the crisis, Mittal deferred its shipment plan to late 2011 and cut jobs, he said.
A 14-year civil war that ended in 2003 destroyed much of Liberia’s economy, decimated its population and left more than 200 000 people dead. It also left power and other infrastructure in critical need of repair, especially in and around the capital Monrovia.
In 2006, President Ellen Johnson Sirleaf inherited a debt burden of more than 700% of GDP and Liberia was then hit by soaring food and fuel prices before the financial crisis.
“We were about to do what I call a major take-off when these crises hit us and then they have led to some serious setbacks on our reform track and on our growth trajectory,” the minister said.
Liberia has been a user of the IMF’s multilateral debt relief initiative which gives heavily indebted poor countries 100% relief on eligible debt owed to the IMF, World Bank and African Development Bank.